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October conversion loan, Australian savings bonds and semi-government borrowing rates



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TREASURER

EMBARGO NOT FOR RELEASE BEFORE 7«QO PM 14 OCTOBER 1977

PRESS RELEASE

STATEMENT BY THE TREASURER, THE RT HON PHILLIP LYNCH, MP

OCTOBER CONVERSION LOAN, AUSTRALIAN SAVINGS BONDS AND SEMI-GOVERNMENT BORROWING RATES

The Treasurer, Mr Phillip Lynch, today announced terms for a

Commonwealth conversion.loan offer, for a new Series of Australian

Savings Bonds to replace Series 8, and new maximum interest rates " 1 r i X - ' · -1 ‘ * ; ■*- " V - I · V - " ' . * / * * · ■> , ' . ■

for borrowings by local and semi-government authorities0

Against the background of the strong take-up''of securities by

the non-bank sector of some $670 million"to end-September,

including the July cash loan and net subscriptions to Australian

Savings Bonds, it had been decided not to offer a cash loan on

this occasion. .

Mr Lynch said that the securities to be offered to holders of the

maturing issues would carry yields in line with those which had

become established in the market during September. ·

The new Series of Australian Savings Bonds - Series 9 - would carry

an interest rate of 9 «75 per cent,' 0.25 per cent lower than that

which applied to Series 8. ' . * v ..

The reduction in the rates being offered on this occasion was

consistent with the Government’s stated objective of responsibly

lowering interest rates as conditions permit.

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CONVERSION LOAN OFFER

The conversion offer would be made to holders of $231 million of

Commonwealth, securities which mature on 15 October, and would close

on Monday 31 October»

The issue which matures on 15 October is an 8»5 per cent stock

originally issued in October 1975» V

Four securities, with yields in line with those prevailing in the . - ?!

market and with currencies ranging from 1 year 7 months to 19 years·,

M will be offered to holders of the maturing issues. They are;

o 9 »6 per cent May 1979» at 99*93 per cent

» 1OoO per cent July 1982, at par

- » TO»2 per cent September 1987» at par

10»2 per cent October 1996, at par,

The May 1979 stock would offer a yield to maturity of about 9 »65

per cent. This compared with a yield of 9»7 per cent on a stock

with the same maturity issued in the July loan. Yields on the M i ..•vVSOp*

V < July 1982 and September 1987 securities to be offered represented ^

a reduction of 0» 2 per cent from those which applied to the ,\g ■ ' ·

comparable stocks issued in the July loan»

The Treasurer said a long term stock was not issued in the

Commonwealth loans in May and July, but is to be offered to

converters of the maturing issue.

The yield of 10.2 per cent on the 1996 security represented a

reduction of about 0.3 per cent compared with the long-term

stock issued in the February loan and the yield on bonds of fifteen

years or more to maturity prevailing in the market at the time of

the July loan.

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Holders of the maturing security would also have the option of

converting into the new Series of Australian Savings Bonds,

AUSTRALIAN SAVINGS BONDS - SERIES 9 .

A new Series of Australian Savings Bonds - Series 9 - to replace

Series 8 would be on sale from the commencement of business on

Monday 17 October0

Mr Lynch said that, since its introduction on 6 May and up to close

of business today, Series 8 had raised gross subscriptions of $570

million; . after allowing for redemptions of Special Bonds and

Australian Savings Bonds since this Series was introduced, the net

amount raised was $380 million.

Series 9 would carry an interest rate of 9o75 per cent - 0,25 per

cent lower than that on Series 8, and would have a period to maturity

of about seven years and nine months,

After the first interest date on 1 July 1978, interest on Series 9

would be paid half-yearly until final maturity on 1 July 1985®

As with previous issues, Savings Bonds Series 9 would be redeemable

at any time at the option of the holder subject to one month1s

notice. Should redemption be effected prior to the first interest

date, interest would be paid at the rate of 7®5 per cent per annum,

LOCAL AND SEMI-GOVERNMENT INTEREST RATES ΐ > . .

Mr Lynch said that following the reduction in market yields on bonds

which occurred in September, the Loan Council had reviewed maximum

interest rates applying to public and private borrowings by local

and semi-government authorities which were last determined in

December 1976,

4

X X

The new maximum rates on borrowings by these authorities would

be % '

Currency of Loans Years

4-6 ·

7-9

1 0- 1 4

15 and over

Public Loans Per Cent

10.3

1 0 . 5

1 0 . 6

1 0 . 6

Private Treaty Loans Per Cent '

10.4

10.6

10.7

10.7

Terms and conditions of securities offered in the conversion loan

and Australian Savings Bonds, Series 9» are set out fully in

prospectuses now being circulated to banks and stockbrokers. ' . ,-v i · .

:· - ,,.i

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CANBERRA ACT 14 October 1977

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